One of the most contentious issues in the current health care reform effort wending its way through Washington, D.C. concerns whether the government should offer a health plan in competition with private carriers. To oversimplify the controversy: supporters argue it will help bring prices down and keep private insurers honest while opponents argue it will unfairly compete, driving private health plans out of business. Both sides are preparing for a no-holds barred fight over the issue. (For more on this topic, please see earlier posts here and here).
The Associated Press is reporting today that President Barack Obama will be seeking a compromise on the issue. The Associated Press describes Nancy-Ann DeParle, director of the White House Office of Health Reform, as stating that “a public plan could be designed to address concerns about the federal government overreaching in its role.” One example given by Ms. DeParle is that “a public plan could pay hospitals and doctors rates that are similar to what private insurers pay — addressing fears that government would use its powers to dictate low rates that private plans can’t compete against.”
Because the government plan could be operated without the need to make a profit and would have lower administrative costs, Ms. DeParle argues such an arrangement could still work to lower the cost of health care coverage. However, there are already non-profits in the health care system. Many Blue Cross Blue Shield plans are non-profit and so is Kaiser Permanente. The Obama administration will need to demonstrate that they will be more non-profit than the other non-profits.
Whether the government can run a health plan more efficiently than private enterprise (whether for-profit or non-profit) has yet to be seen. That didn’t seem to be the case with California’s experiment, the Health Insurance Plan of California. And since government programs tend to look at distribution costs for savings, putting the focus on reducing administration costs doesn’t necessarily bode well for health insurance agents. Whether these savings are real or a mirage will be the topic of much debate. Agents will have a chance to argue their value to the system and statistics of all kinds will be plentiful. But the good news is that there will be a debate.
It’s still early in the debate. What I take away from Ms. DeParle’s comments is that the Obama Administration is aware of the dangers posed by a government-run competitor and are open to a constructive dialogue on the issue. That’s a hopeful sign. In a previous administration (one that rhymes with “Clinton”) there was little talk of compromise. The Obama Administration’s approach doesn’t guarantee common ground will be found, but it’s willingness to try to find it is as significant as it is welcome.